Notes on usability and related things by a project manager who manages electronic publishing projects.

May 03, 2012

Have been reading a good review of Facebook's prospects, in the Financial Times.Several interesting points (and data about the company here), but I particularly liked the following:

Facebook aims to harvest information about users and use that as a basis for ever more targeted advertising: "But the issue is whether what Facebook does to increase the value of the data it collects makes users enjoy Facebook less and use it less. Users might start to think they are the product not the customer. Not a fun feeling." [my italics]

The article points out a contrast between Facebook and Google here: if I Google for "catering services for weddings" or "Ford body repairs", its reasonably likely that I have an immediate commercial intention, and some adverts along with the search results may not be too creepy. Whereas someone posting to Facebook that they just got engaged, or that some idiot just rear-ended their car is spreading news to friends: quite a different situation.

Until recently, publishers typically sold by the Wolesale model. The publisher and wholesaler agree a price and a number of printed books to be shipped to the wholesaler. It is then the wholesaler's business to decide what price to charge their customer. Since the collapse of the Net Book Agreement in the 1990s, a UK publisher has had no legal right to dictate retail prices. Probably that has resulted in a lot of books that I have bought since then have been cheaper for me as a consumer. But it has caused some discomfort in the publishing industry, and probably not just moaning about having to work harder to survive in an industry that has become more competitive.

Critics of the wholesale model say that it leads towards monopolies in book-selling. A wholesaler doing large volume can arm-wrestle better with publishers over terms, and then gain competitive advantage from that lower price. That can drive up market share, enabling the seller to get better terms out of the publisher next time. And so it goes. Moreover, sellers with enough volume can afford to sell some titles as a loss-leader (i.e. making a loss on every copy sold but hoping to make up in other ways). Later Harry Potter novels famously were used as loss-leaders, with stories of small bookshops buying stock from supermarkets and reselling, as they could get a better price there than from the publisher or their usual wholesaler. Only those with deep pockets can loss-lead, and trade magazines at the time had a lot of copy about the fairness of all this.

Perhaps because of these problems, a number of publishers are using the Agency model for eBooks. In this, the publisher and wholesaler agree a price and a percentage commission that the wholesaler gets. With eBooks, it would not be necessary to agree a quantity of copies - the agent could sell what they can and the publisher could find out how things went from the sales data the seller provides. Apple use this model for iTunes, for example.

But once publishers are again able to set prices (nowadays without legal cover from the Net Book Agreeement) publishers have to be very careful what they discuss with each other, lest they move into cartel land.

It is a confusing time for the industry - I recently was discussing the fate of fiction publishing with my friend the author and lecturer Anthony Nanson. We couldn't decide whether a combination of price-cutting and piracy would render today's publishing models mostly un-economic, or whether there would be a new golden age.